Taxpayer-supported Broward Health offered Thursday to pay $69.5 million to settle a four-year-old federal investigation into allegations of massive Medicare and Medicaid fraud.

The proposed payout is on top of more than $10.2 million that the North Broward Hospital District — Broward Health’s legal name — already has paid an out-of-state law firm for legal advice about how to deal with the probe.

Broward Health’s executive boardroom was packed with as many lawyers as commissioners when the unanimous vote was made to approve the offer. The vote followed a two-hour non-public meeting about the case between the seven-member commission and defense counsel.

Commissioners offered no public explanation for their decision or how, if the government accepts the offer, it might impact Broward Health’s operations. The enormous offer, however, signaled a collective belief that federal agents and prosecutors have turned up substantial evidence of wrongdoing that could prove much more costly if the matter is not settled soon.

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Official silence followed an announcement, as the 7-0 vote was taken, that Justice Department attorneys had instructed Broward Health to make no public comments until the case is concluded. Citing the government’s muzzle, Broward Health president and chief executive Dr. Nabil El Sanadi, hired in December, and new in-house general counsel Lynn Barrett, hired last month, declined to comment.

The investigation surfaced in May 2011 when U.S. Department of Health and Human Services agents subpoenaed Broward Health records about the public healthcare system’s connections to more than two dozen doctors, including medical directors at Broward Health’s lucrative orthopedic, sports medicine and cardiology practices.

Millions of documents were ultimately turned over.

Details of the government’s case against Broward Health, the county’s largest provider of healthcare services, remain largely secret.

WHISTLEBLOWER

But the investigation and subpoena are known to stem from a complaint brought by an unidentified whistleblower. Private individuals with knowledge of fraud against the government can blow the whistle, and seek a reward of up to 25 percent of whatever the government recovers, by filing a lawsuit under the federal False Claims Act.

The person who filed the suit is called a relator. If the government accepts Broward Health’s settlement, the relator could collect a reward of up to $17 million.

Such lawsuits are initially kept sealed to allow the Department of Justice time to investigate and decide whether to help prosecute the lawsuit. If the settlement offer is accepted, and a judge approves it, the case is unsealed and further details become public.

Baumann is also an expert regarding a pair of other laws that records show figure prominently in the Broward Health case: the federal Stark Law and the Anti-Kickback Statute.

The Stark Law generally prohibits doctors from referring Medicare or Medicaid patients to hospitals with which they have a financial relationship. Likewise, it forbids hospitals from submitting claims from prohibited referrals. Violators face stiff civil penalties.

The Anti-Kickback statute forbids offering, paying or soliciting or receiving anything of value to induce or reward referrals or generate federal healthcare program business. Criminal violators face up to five years in prison and a $25,000 fine for each violation.

If its settlement offer is accepted, Broward Health would become the second large hospital system in Florida in recent years to pay big for having improper financial relationships with its physicians. Last year, the Halifax Hospital Medical Center and Halifax Staffing in Daytona Beach agreed to pay $85 million to resolve allegations that they submitted Medicare claims that violated the Stark Law’s self-referral rules.

On Thursday, Broward Health’s commissioners also authorized El Sanadi to enter into any integrity agreement that might be required by the government to close the deal.

Already, an impact

Whether or not the government accepts the settlement offer, however, the investigation has already had a substantial impact on the district’s business practices.

For example, last year the governing board approved a new compensation scheme that seeks to make its physician compensation practices “commercially reasonable.”

More than a dozen Broward Health doctors have signed agreements under the new rules intended to assure compensation based on “fair market value.” One of those doctors who took a substantial pay cut was Michael A. Chizner, chief medical director of Broward Health’s Heart Center of Excellence.

The district, whose flagship facility is Fort Lauderdale’s Broward Health Medical Center, is the medical safety net providing services regardless of the ability to pay for the northern two-thirds of the county.

Florida Bulldog is a not-for-profit news organization created to provide investigative reporting in the public interest. Contributions are tax-deductible. www.floridabulldog.org